Is the financial world (particularly in the US but not exclusively so) trying to get rid of the euro? We are aware that some political currents actually believe this but this time, this accusation comes from one of the founding fathers of the single European currency, Valéry Giscard d'Estaing, who is not usually considered as a dangerous revolutionary. The position that he has taken and the request for him to respond can be located in the context of the results from last week's European Council.
A fairly favourable context. These results were, overall, given a reasonably positive welcome by most of the different political forces (in Europe and elsewhere), pundits and economists. What this effectively means was largely recognised, they aim to provide stability for the euro, together with the budgetary discipline required for this stability to be put into practice. At the same time, however, observers have their eyes trained on the sacrosanct “reactions from the markets” from three different angles: the value of the euro; the level of interest rates required for purchasing Treasury bonds issued by less solid countries in the Eurozone and gradings given by the “ratings agencies”. The first aspect doesn't deserve to be taken into consideration because whatever the euro's exchange rate is, there will always be somebody who complains about it, either because it is too high or too low (and often those doing the complaining are the same people). The truth is that the euro is quite stable and that it is in practice the second most important currency in the world. The second aspect, the level of interest rates, largely depends on the financial world. New European instruments, which are already functioning or have been decided upon, have been created to combat excessive speculation by the financial community in countries experiencing difficulty but which are respecting the rules. The third aspect is rather paradoxical: the European authorities continue to protest against the abuses and mistakes committed by the ratings agencies but they are at the same time extremely frightened about their ratings. The objective is not to get rid of them, because they are indispensable, but the EU is currently developing measures for regulating these agencies' behaviour, whilst respecting their autonomy. Work is progressing but in the meantime, their verdicts have a huge and sometimes unreasonable impact.
Three points by VGE. It is in this context that the denunciation and appeal made by Valéry Giscard d'Estaing should be located and which are based on three essential factors (the quotations are taken from the publication,Le Point):
a) irreplaceable euro. “It is impossible for one of the biggest consumer markets in the world to function if there are around fifteen different currencies floating around among them. The current crisis has provoked a cascade of competitive devaluations and would have damaged the system and inflicted some serious blows to business. Europeans would have discovered the anguish of living in an arena of different destroyed currencies”.
b) old enemies. The creation of the euro had from the outset been criticised by, “a large part of the Anglo-Saxon financial system, particularly the one in New York… today, this does not involve criticism any more but rather deliberate attacks. These attacks are not coming from governments but from speculators, who still have a significant mass of liquidity available to them in New York and London, estimated to be worth more than €4 trillion. They are not seeking to invest this liquidity into business (in the way that Chinese and Arab sovereign funds are doing) but to make short-term profits, whilst tinkling on their computers”.
c) defeating speculation. “It is true that some small Eurozone countries have failed to conduct their budgetary management responsibly. The objective of speculation, however, is not only to make profits from management shortcomings but to attack the European monetary system itself… speculation directed from New York it is attacking the European currency and Europeans must defend it and defeat speculation ”.
A people's objective? The response to the situation described above should, according to Valéry Giscard d'Estaing, be threefold: 1) psychological: “ A floating currency, which is particularly underpinned by the German, French, Dutch and Italian economies, with an exchange rate that is still above its original exchange rate, cannot be destroyed by the market”; 2) technical: “Fighting speculation on the ground… to carry out rescue plans, the mechanism set up appears to be sufficient. It is up to the European Central Bank to ensure supervision of the banking sector”; 3) economic. “The crisis revealed the necessity for greater coherency between economic policies”. VGE considers that the expression “economic governance” is inappropriate and is proposing to replace it with “coordination requirements”. The action advocated in this sense is subsequently put forward, “This is ultimately a strategic objective for the European people, a people presented as being divided, manhandled by the international media and underrepresented on the international scene”.
(F.R.)